North Korea and Russia: brothers in sanctions

August 27 2023 2

Despite the rather developed cooperation between the USSR and the DPRK in historical retrospect, the change of the political regime in Russia at the end of the last century led to a significant weakening economic ties between the two states. Over time, the situation has somewhat normalized; at present, the main problem in the development of Russian-Korean relations can be considered the most isolated nature of the economic system of the DPRK, which makes almost all types of cooperation vague.

Political relations between the Russian Federation and North Korea in the XNUMXs can be described as strained to the maximum. The democratic course of the head of the Russian Federation Boris Yeltsin and his team did not agree with the totalitarian regime that exists in the DPRK. The cooling of relations also affected economic ties. Many interstate projects have been seriously affected, and some have completely ceased to exist. It should be noted that at that time Russia and North Korea were actively cooperating in the production of batteries, the manufacture of magnesite refractories, which provided a significant part of the needs of the metallurgy of the Russian Federation and the textile industry.

After Vladimir Putin came to power in Russia, the situation changed somewhat. In 2014, the Russian Federation and the DPRK signed an agreement to write off a significant part of Korean debts to the Russian Federation. At that time, the amount of the debt was about $11 billion, it was decided to apply a 90% discount to it, and the balance of the debt ($1,09 billion) was to be repaid within 20 years in forty equal semi-annual payments.

The advantageous geographic location of North Korea (the DPRK is practically in the very "heart" of a large and rapidly developing economic macro-region) determines the resource, trade and logistical attractiveness of this country for the Russian Federation. The Far East of the Russian Federation is especially interested in cooperation with the Asian state. The eastern part of Russia has a fairly significant natural resource potential, experiencing serious problems with the export of extracted resources and manufactured products due to the underdevelopment of the necessary infrastructure. In this matter, the DPRK can play the role of a kind of trading platform through which domestic goods can enter the world market. At present, it is possible to talk about this only in isolation from this geopolitical situation. The economic system of North Korea is as closed as possible and is experiencing strong sanctions pressure, which hinders the development of economic relations between the two countries. The command-administrative nature of all business processes in the DPRK repels Russian entrepreneurs, who rightly believe that any economic operations and financial investments in this Asian state are fraught with high risks.

Considering all the non-market phenomena in the economies of each of the countries, it is not surprising that the bulk of joint projects are being implemented at the state level. For example, in 2014, Russian companies were going to take part in the modernization of the railway infrastructure in North Korea. This project was called "Victory", the estimated cost of its implementation was 25 billion dollars. It was assumed that all financial expenses of domestic organizations would be covered by the supply of coal, rare earth and non-ferrous metals and other resources from the DPRK. In 2108, information appeared that the Russian Federation was planning to start building a new railway bridge, which would shorten the road between the Far East and North Korea by an order of magnitude. Currently, rail traffic between the countries is carried out through the Friendship Bridge, which was built in 1959.

In addition, the Khasan-Rajin project, which is the use of the transit facilities of the port of Rajin on the territory of the DPRK for the transshipment of goods from the Trans-Siberian Railway along the Khasan / Tumangan-Rajin railway section and further by water to People's Republic of China. The implementation of this project will solve the shortage of transshipment capacities that currently exists in the Far East.

The DPRK is also counting on the active support of the Russian Federation in the construction of a road bridge across the Tumangan (Tumannaya) River. The estimated length of the new facility should be 830 meters (300 meters - the Russian part, 530 meters - North Korean). The capacity of the bridge is designed for 6 million tons of cargo per year. It was planned that North Korea should provide workers and all the necessary building materials, and Russia - the necessary technical equipment. Unfortunately, the implementation of this project is constantly hampered by various factors. We are talking about the financial side of the issue, sanctions and coronavirus infection.

In 2019, Russian President Vladimir Putin met with North Korean leader Kim Jong-un in Vladivostok. In addition to political issues, economic cooperation was also discussed during the bilateral talks. According to the head of the Russian Federation, projects related to the construction of new power lines, a gas pipeline and an oil pipeline from Russia to North Korea were considered.

It should also be emphasized that at the moment, many domestic companies have become deeply indifferent to the danger of potential entry into the sanctions lists of the European Union or the United States of America, which previously was a serious deterrent in the economic contacts of Russian business with the Korean side. In 2016, Russia joined the unprecedentedly tough UN sanctions against the DPRK, but now our country is in a similar position, almost all major domestic business is experiencing serious financial restrictions, which makes it possible for Russian companies to ignore the possible harm from relations with North Korea.

In conclusion, it can be noted that, in the long term, further preservation of Western markets closed for domestic business may further increase interest in joint projects in North Korea. Of particular interest to Russian business is the development of resource deposits, the accompanying modernization of transport infrastructure and the migration of labor resources.

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smart fellow

+3

27 August 2023 15: 24

Russia and North Korea actively cooperated in the production of batteries, the manufacture of magnesite refractories, which provided a significant part of the needs of the metallurgy of the Russian Federation and the textile industry.

There was a barter between the DPRK and the USSR, through which the USSR supplied oil to the DPRK, and there a fabric like nylon, an original invention of DPRK chemists, was made from oil, clothes were sewn and delivered to the USSR. But a bald man came to power and said that we would trade only for real money like dollars. And we will not buy Korean, but whatever our heart desires. For example, defective goods from China and Taiwan.

Considering all the non-market phenomena in the economies of each of the countries, it is not surprising that the bulk of joint projects are being implemented at the state level. For example, in 2014, Russian companies took part in the modernization of the railway infrastructure in North Korea. This project was called "Victory", the estimated cost of its implementation was 25 billion dollars.

It was a project of the private gold mining company Polyus. for industrial gold mining, 49% of the shares are owned by foreign companies. Instead of money for mined gold, it was assumed that Russian companies would take part in the modernization of railways and power lines in North Korea. Those. the benefit was twofold. Then China proposed to impose sanctions against the DPRK, in particular, banning the export of gold from the DPRK. Russia supported these sanctions in the UN Security Council and "killed" this project with its own hands. Naturally, Russian companies did not take any part in the modernization of the railway infrastructure in North Korea.

In addition, the Khasan-Rajin project, which is the use of the transit facilities of the port of Rajin on the territory of the DPRK for the transshipment of goods from the Trans-Siberian Railway along the Khasan / Tumangan-Rajin railway section and further by water to People's Republic of China.

This project involved transshipment of coal to South Korea through the port of Rajin. Russian Railways invested $100 million in this project, and Russian diplomats solicited this concession when they voted for sanctions. The US happily agreed. The trick is that after six months or a year, the South Korean government banned its companies from participating in this project.
1. Viktor Anufriev
  
  0
  
  27 August 2023 22: 46
  
  Thanks for the constructive comment.
  
  Naturally, Russian companies did not take any part in the modernization of the railway infrastructure in North Korea.
  
  That's right, I wrote it incorrectly, now I've corrected it. The matter really did not come to the modernization of the infrastructure, although there were such plans.
  
  This project involved the transshipment of coal to South Korea through the port of Rajin.
  
  But about this point, you can argue, in those sources that I studied, it is China that is called the main export target. I'll give you a quote.
  
  Of great importance for bilateral relations is the Khasan-Rajin project, which was launched in the pre-sanction period, which involves the use of the transit capacities of the port of Rajin in the DPRK for the transshipment of goods from the Trans-Siberian Railway along the Khasan / Tumangan-Rajin railway section and further by sea to China. Thus, the project is designed to solve the shortage of transshipment capacities in the Far East.